When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. OurPrivacy Noticeexplains more about how we use your data, and your rights. You can unsubscribe at any time.

International services group Serco said it has made a “respectable start” on the road to recovery with its half year results today.

The group, which owns a 50% stake in the Merseyrail franchise, has had a torrid two years after admitting in 2013 that it had charged the Government for tagging criminals who were dead or non-existent.

It had to repay the Government £68.5m for overcharging on criminal tagging contracts as well as £2m from past profits for a prisoner-escort deal. A series of profit warnings ensued.

Today it announced revenues for the six months to June 30 of £1.789bn, down from £2.026bn the previous year, and a pre-tax loss of £76.2m compared with a profit of £10.9m the year before, after an exceptional charge of £117.4m, which included a £70.1m impairment charge on assets held for sale, and £32.8m refinancing costs.

A trading profit of £62.7m was slightly below last year’s £63.3m. Prior to today’s announcement the group, which runs a vast range of services from prisons to rail services worldwide, said its half-year trading profit was set to remain flat at no less than £45m.

Free cash flow was an outflow of £77.5m, compared with an inflow of £49.7m last year, although it anticipates free cash flow for the year of £150m.

In April the group received £530.1m from a rights issue, and it slashed operating costs by £200m. By the close of the first half, net debt had been reduced by £392m at the start of the year to £290m.

No interim dividend will be paid to shareholders.

Chief executive Rupert Soames said today: “This is a respectable start to what will be a long, and no doubt occasionally bumpy, road to recovery.

“In the period we completed some essential first steps, most notably raising the equity and refinancing our debt which has given us much a stronger balance sheet.

“Trading in the period was a little better than we anticipated at the time of the rights issue, and we are maintaining our previous guidance for 2015, albeit that we now believe that the risks associated with this guidance are weighted to the upside.

“As previously stated, we expect that revenues and profits will continue to be under pressure in 2016.

“We are making progress executing our strategy; total costs in the period were some £200m lower; we are reshaping the portfolio to become a focused provider of public services, and making good headway exiting loss-making contracts.

“Good progress is being made on developing and rolling out better reporting and control procedures.

“Many challenges remain, but we are now heading in the right direction.

“With the rights issue and refinancing behind us, we can now focus on the service we provide our customers and delivering our strategy.”

He added: “We have ended the first half of a very important year in reasonably good order, having completed a number of essential steps on the long road to recovery.

“We are rightly cautious on 2016 given further revenue attrition and profit pressure, but I am confident we are taking the necessary actions, and have the strategic plan, management eam and stabilised financing position in place to succeed.”